.p2p auction parameter discussion

[yidaidaxia]

@toast, would you pls update/clarify what's Auction Specification you are going to implement when BTS DNS launch?

I actually translated the "DNS .p2p Auction Specification (https://github.com/BitShares/bitshares_toolkit/wiki/DNS-.p2p-Auction-Specification)" the day before yesterday then I found there is some errors in the content then I notice it's an early June article then I went through this thread just now and found what I just introduced to Chinese community is really totally out of date......

I know Agent86's proposal and I know it might use another DLS and get implemented when BitAssets available.

So you may help me on below quesions:

D will be 0 and no 1) The initial required bid is 0.
2) Your required_bid is equal to (previous_bid + (R*(previous_bid - previous_required_bid))
3) When you place a bid, (D*(your_bid - previous_bid)) goes to dividends and (previous+bid + (1 - D)*(your_bid - previous_bid)) goes to previous bidder.

The initial required_bid will not be 0 and will decided by Delegates? So it will vary by different Delegates and how?

Will R still be 1 or a bit lower than 1 or very small like 0.1 or 0.2?

D is likely to be 1 and you will not have kickbacks when you are outbid, correct? The original bid you put will be returned to you totally or just a fraction of it (like 90% )?

What's the condition for a auction to be end?  a specific time after it starts?(then how long?) A specific quantity of blocks produced after it starts(then how many?) or other condition set by Delegates or the sellor?

How renewal rate to be set?

And I think we will reserve top current famous domains for maximize system value by deliver/sell them to the related company in future, so what's the detailed plan? top 100? 1,000? 10,000?

Thanks.

[jae208]

I say toast should go with what he thinks is best based on his ideas and see how things go and if what he is doing isn't working than just try something different.

[gamey]

I think Toast should really look into partnering with namecoin on the adoption side.  If you can make one browser plugin that does all the top-level domains outside ICANN then I think everyone's chance of success goes up proportionately.  I mean I'm sure he's thought this and it has been discussed, but... If we're going to be pushing visions of what we think will help adoption..  Perhaps delegates can fund this.

[Agent86]

First thing I do when this releases (if I don't just sell my shares) is buy every halfway reasonable sounding domain I can and promise never to sell them in hopes you guys start to "get it"

irrational actors are everywhere. Consider all possibilities!

It's not completely irrational   I think I would make more money if I can somehow convince them to make a valuable domain DAC than I would make by worrying about my shares in an ultimately flawed DAC that's of little use or value.

A domain registry is basically a spreadsheet with a list of domains with their corresponding list of owners.  Why should the rest of the world take our spreadsheet full of domain names snatched up by our little group of insiders and early adopters as the definitive spreadsheet?  Why is this spreadsheet more valuable or legitimate than anyone else who puts together a spreadsheet and assigns/sells the domains to other people?  You have to get the world to take it serious and the way it's currently proposed will not accomplish that.  I believe my idea will accomplish this.

[swedespade]

Yes, like a trapped investor turned troll.  You guys have created a bunch of potential that, so it seems like a plausible concern

.

I agree with Adam, see Agent86:

First thing I do when this releases (if I don't just sell my shares) is buy every halfway reasonable sounding domain I can and promise never to sell them in hopes you guys start to "get it"

irrational actors are everywhere. Consider all possibilities!
That being said, release and reiterate is a good to go by. You can spend years making a perfect system!

I expect shares to be trading on exchanges before domain sales begin

Having the shares released on exchanges first should mitigate most of this irrational squatting behavior IMO.

[AdamBLevine]

Yes, like a trapped investor turned troll.  You guys have created a bunch of potential that, so it seems like a plausible concern.

[toast]

Yes.

If I spent $10,000 supporting invictus very early and that results in 10,000,000 domainshares for me, is it really so painful to spend 1000 each on 1000 promising domains ASAP?   Really the only one who can stop me is someone else who also bought in at cheap cheap prices because my actions do not make economic sense to someone coming in at this later point when the multiplier is so much worse.

I *love* this system, i'm just saying be real

(edit: maybe the disconnect is that I expect shares to be trading on exchanges before domain sales begin, and you expect it to be hard to buy shares while some people are able to buy domains?)

To make sure I understand: You are saying that, given a choice between $100 worth of dollars and a domain you think is worth $101, you'd pick the domain, because you obtained those $100 worth of shares for less than $100, whereas someone who does not yet own shares, given the choice between $100 worth of dollars and a domain they think is worth $101, would not pick the domain, because they have to get their $101 worth of domain for $100.

So you are telling me to anticipate a particular kind of irrational actor, and that the effect is made worse when there are many shares.

I'm totally open to any number of initial shares. What's good, 5 million? Are there other kinds of irrational behaviors I should expect if I make it too small?

[AdamBLevine]

Yes.

If I spent $10,000 supporting invictus very early and that results in 10,000,000 domainshares for me, is it really so painful to spend 1000 each on 1000 promising domains ASAP?   Really the only one who can stop me is someone else who also bought in at cheap cheap prices because my actions do not make economic sense to someone coming in at this later point when the multiplier is so much worse.

I *love* this system, i'm just saying be real

[toast]

Ok so let's use that analogy on the other extreme:

I pay $100 per year to list my personal webpage with a few download links to some crypto tools I built. A few days before my lease expires someone bids $200, I'm on vacation and they get it. Replace my download links with versions that steal everyone's keys.

So now what, we have to add some logic where when someone makes a bid above you there's some minimum time you get to re-bid before you actually lose the name? I guess that's not so bad, I just have to somehow notify all my users that my site is about to get compromised.

The more concerning scenario, actually almost identical to the one you said but formulated in a way that doesn't sound irrational: Big Corp sees that my site with its new brand is quickly gaining popularity, says to pay them $10k per month or else they'll buy my name for that much because it's worth it for them to not have competition grow even if it is not possible to monetize the users for that much. This also coincidentally happens near the end of my lease, because hey it takes about a year to build up a good brand.



@adam I imagine everyone will always be using $ value to judge and so I don't think initial supply or price per share matters at all. Let's just pretend we're using USD for these, all the points made by everyone else are still valid.

Toast, isn't the current strategy going to result in a lot of people having tens of millions of Domainshares each?   You can reckon it in whatever currency you want but if you are talking about relative prices, it seems safe to say an attacker can greatly amplify their attack by supporting invictus early and securing an overlarge share relative to your anticipated value of them for purposes like dns auction.

Still not following... if you have 1% you have 1%. I could make there be only 10 shares total, so what?

If you're saying that someone who buys in early will have lots of shares... again, so what? At any given point they have the choice of spending $X worth on a domain or $X worth on dollars. If they choose the domain over dollars and then that's equivalent to someone who has $X worth of dollars buying in and spending it on the domain. Are you saying it's psychological and that someone who has millions of shares will think of themselves as domainshares-rich and buy names they wouldn't have bought with equivalent value of dollars?

[AdamBLevine]

Ok so let's use that analogy on the other extreme:

I pay $100 per year to list my personal webpage with a few download links to some crypto tools I built. A few days before my lease expires someone bids $200, I'm on vacation and they get it. Replace my download links with versions that steal everyone's keys.

So now what, we have to add some logic where when someone makes a bid above you there's some minimum time you get to re-bid before you actually lose the name? I guess that's not so bad, I just have to somehow notify all my users that my site is about to get compromised.

The more concerning scenario, actually almost identical to the one you said but formulated in a way that doesn't sound irrational: Big Corp sees that my site with its new brand is quickly gaining popularity, says to pay them $10k per month or else they'll buy my name for that much because it's worth it for them to not have competition grow even if it is not possible to monetize the users for that much. This also coincidentally happens near the end of my lease, because hey it takes about a year to build up a good brand.



@adam I imagine everyone will always be using $ value to judge and so I don't think initial supply or price per share matters at all. Let's just pretend we're using USD for these, all the points made by everyone else are still valid.

Toast, isn't the current strategy going to result in a lot of people having tens of millions of Domainshares each?   You can reckon it in whatever currency you want but if you are talking about relative prices, it seems safe to say an attacker can greatly amplify their attack by supporting invictus early and securing an overlarge share relative to your anticipated value of them for purposes like dns auction.

[merockstar]

@Agent86 I still do not see how you can't imagine someone with more money than you wanting to buy your name and doing something malicious with it. I would *never* rent a domain if I expect it to be possible for some rich guy I piss off to snipe it out from under me.

Ok, I'm trying to think of best way to explain how I see it.

Imagine you have a barber shop and you are leasing a space for your business (common practice).  You have been there 5 years and have prepaid your lease out by 5 years @ $12k/yr.  Now, your customers know your location, you have adds in yellowpages etc.  Some rich guy who wants to spite you (maybe the large hairdresser at other end of stripmall?)   He wants to raise your rent to $20k/yr.

God, I would LOVE to do this to my former employer (with in real life buildings).

They would totally up, shit themselves, and move over like 10K even though they make millions per store-- and they can't just put a store anywhere.

Thanks for carving a daydream Agent86, but yea I did read the whole post and saw where you went with it...

[gamey]

Large corporations are not going to be buying p2p domains.  They don't want multiple domains. I am assuming this is supposed to be a free speech product with having domains that are protected against seizure.  You value free markets, but even with Toast's proposal the corporation can likely buy their domain off chain.  (Assuming they'd want it). 

You see 2p2 as becoming a definitive source.  I think ICANN and the centralized domain system works quite well for that.

It could always be forked with the 2 distinct target audiences and the corresponding fee structures.  In fact having 1 plugin do all of them wouldn't be a bad thing.  .bit, .p2p and .bizdir (or whatever)  It could help adoption imo.

Anyway.. I'll officially go mute before Toast offs me.

[Agent86]

Agent86 -

p2p is going to appeal people specifically looking for anti-censorship.  Established businesses are not going to want to be on the domain with all the weird riff-raff.  Your idea might help the DAC in the longrun if it wouldn't  kill adoption. 

And it is censorship.  It isn't like a First Amendment level of censorship, but having someone be able to buy up your private domain for $XXX blows.  So now you have to pay extra.  With these concerns in the back of people's minds, who is going to be the early adopters?  I would think just squatters.  There is so many problems with adoption that adding FUD to this by the concerns expressed surely won't help.

With all due respect gamey, I don't think you are fully understanding my proposal.  There is no incentive for squatters.  People are not just "buying up your private domain"  they are buying it from you for your profit.  You also know full well going into things that if you get BestBuy.p2p for your electronics store down on the corner the day will likely come that you can't afford it and will want to sell.   Customers who we want to install plugins and use our DAC for ".p2p" domains will have WAY more respect for the system and will be much more likely to use it and install the plugin if they find that the registered domains have real appropriate content and BestBuy.p2p is owned by BestBuy not by your lame used electronics store.  I, for one, would absolutely be an early adopter.  I most likely wouldn't spend time on your other proposals for the similar reasons I don't have an interest in .bit domains from namecoin.  It is not censorship; anyone can lease a domain whether they are anonymous or not without any censorship.  They are leasing the domain and they know the rules going in.  It is a fools errand for people to be running around trying to buy your worthless domain to censor you, and it won't happen.  It probably just puts more options and/or money in your pocket so you can get your message out louder.

[Agent86]

to clarify toast; in my proposal you are never "near the end of your lease"  because you just auto-extend your lease to the max allowed on a monthly basis or however often you like, so you always have a multi-year buffer time there.

[gamey]

Agent86 -

p2p is going to appeal people specifically looking for anti-censorship.  Established businesses are not going to want to be on the domain with all the weird riff-raff.  Your idea might help the DAC in the longrun if it wouldn't  kill adoption. 

And it is censorship.  It isn't like a First Amendment level of censorship, but having someone be able to buy up your private domain for $XXX blows.  So now you have to pay extra.  With these concerns in the back of people's minds, who is going to be the early adopters?  I would think just squatters.  There is so many problems with adoption that adding FUD to this by the concerns expressed surely won't help.

[toast]

Ok so let's use that analogy on the other extreme:

I pay $100 per year to list my personal webpage with a few download links to some crypto tools I built. A few days before my lease expires someone bids $200, I'm on vacation and they get it. Replace my download links with versions that steal everyone's keys.

So now what, we have to add some logic where when someone makes a bid above you there's some minimum time you get to re-bid before you actually lose the name? I guess that's not so bad, I just have to somehow notify all my users that my site is about to get compromised.

The more concerning scenario, actually almost identical to the one you said but formulated in a way that doesn't sound irrational: Big Corp sees that my site with its new brand is quickly gaining popularity, says to pay them $10k per month or else they'll buy my name for that much because it's worth it for them to not have competition grow even if it is not possible to monetize the users for that much. This also coincidentally happens near the end of my lease, because hey it takes about a year to build up a good brand.



@adam I imagine everyone will always be using $ value to judge and so I don't think initial supply or price per share matters at all. Let's just pretend we're using USD for these, all the points made by everyone else are still valid.

[Agent86]

@Agent86 I still do not see how you can't imagine someone with more money than you wanting to buy your name and doing something malicious with it. I would *never* rent a domain if I expect it to be possible for some rich guy I piss off to snipe it out from under me.

Ok, I'm trying to think of best way to explain how I see it.

Imagine you have a barber shop and you are leasing a space for your business (common practice).  You have been there 5 years and have prepaid your lease out by 5 years @ $12k/yr.  Now, your customers know your location, you have adds in yellowpages etc.  Some rich guy who wants to spite you (maybe the large hairdresser at other end of stripmall?)   He wants to raise your rent to $20k/yr.  So he goes to your landlord and puts in deposit of $20k x 5yrs = $100k.  Your landlord makes you aware of it and says you have 5 years to decide what to do.  If you make a quick decision, he has the spot next door available at your old rate, or maybe less.   So if you like you can take 6 months to tell all your customers contact the yellow pages etc. get the new shop open, move your stuff, forward the mail and then collect a little less than $40k profit for your trouble.  Sure, it could be a bit of a pain, but you get rewarded.  Lets look at the other guy:  He just spent $100k paying way above market rate for a place he has no need for just in some vain attempt to inconvenience you.  He'll then have to eat it at a complete loss or immediately put it back on the market at a big loss.  I guess he could open a hairdresser there, but everyone has been made well aware that this is new ownership and he is not fooling anyone.  It's a lot of effort and money to start a business he never intended to start and the lease price was too high for you so he's obviously overpaying.  He's kicking himself already.  Maybe you don't want to move, maybe you stay there for 4 years while this rich jerk has his $100k tied up doing nothing.  Maybe it was a good time for you to move on anyway at that point.  Then you start the moving process; he'll probably start panicking and trying to cut a deal with you because he wants his money back already and doesn't want the stupid shop for 5 years.

I mean is this a real problem that people contend with?  Is this really a way to harm someone or just a great way to shoot yourself in the foot?

Maybe he's been more sneaky and has been slowly making higher offers over time but it's always up to you if you like to extend your lease at a bit higher rate, or if you tie up the attackers money and make him start sweating.  Or if you take the money and run at a time that is most convenient for you.

[AdamBLevine]

After a talk with BM just now:


* You get back exactly what you put in, no kickbacks.
* Delegates set the number of auctions that are allowed to close in a given time to prevent domains that didn't get attention from getting sold off.
* Global, fixed renewal rate set by delegates.


@Agent86 I still do not see how you can't imagine someone with more money than you wanting to buy your name and doing something malicious with it. I would *never* rent a domain if I expect it to be possible for some rich guy I piss off to snipe it out from under me.

First thing I do when this releases (if I don't just sell my shares) is buy every halfway reasonable sounding domain I can and promise never to sell them in hopes you guys start to "get it"

Really? You're going to sink $20,000 on a few hundred domains and not sell them for a profit?

I think his point is that it's not 20k if he starts out with a bunch of domainshares since he has an investment in bitshares and the supply just went to 2 billion, so we're all going to be rich rich rich! 

and thus it's not really 20k.  It might be the opportunity cost of having spent them as 20k, but the base cost will be a fraction of a fraction of that.

Or am I missing something?

[toast]

I still think you need a minimum price.  Previously I said a decaying price function, but the point was really just that auctions have a minimum price.  There are going to be domains people fight over, then domains that are worth the minimum allowed to bid.  Those low value (but worth something) domains could clog your blockchain.  I mean, thats what i'd at least consider doing.  Although thats not necessarily wise either with renewal fees.

Yes, there's a minimum price, probably equal to the renewal fee which is reasonably priced (I'd imagine delegates set it to just below the renewal price of icann domains)

[gamey]

I still think you need a minimum price.  Previously I said a decaying price function, but the point was really just that auctions have a minimum price.  There are going to be domains people fight over, then domains that are worth the minimum allowed to bid.  Those low value (but worth something) domains could clog your blockchain.  I mean, thats what i'd at least consider doing.  Although thats not necessarily wise either with renewal fees.

[toast]

After a talk with BM just now:


* You get back exactly what you put in, no kickbacks.
* Delegates set the number of auctions that are allowed to close in a given time to prevent domains that didn't get attention from getting sold off.
* Global, fixed renewal rate set by delegates.


@Agent86 I still do not see how you can't imagine someone with more money than you wanting to buy your name and doing something malicious with it. I would *never* rent a domain if I expect it to be possible for some rich guy I piss off to snipe it out from under me.

First thing I do when this releases (if I don't just sell my shares) is buy every halfway reasonable sounding domain I can and promise never to sell them in hopes you guys start to "get it"

Really? You're going to sink $20,000 on a few hundred domains and not sell them for a profit?

[bitbro]

Agent86 is Satoshi


Sent from my iPhone using Tapatalk

[Agent86]

If you guys aren't going to implement a system that lets people pay market rate for a domain, you may as well just treat them like user names at that point.  They are first come first serve and everyone pays just on the data cost of storing the names, so more names means higher cost per name.  The whole one-time auction process to reach "market rate" is silly, confusing, and does not accomplish the stated goals.

".p2p" will never be taken seriously by businesses, and will never be able to compete in a meaningful way with the ICANN system.  At least ICANN has some checks and balances against squatting.

First thing I do when this releases (if I don't just sell my shares) is buy every halfway reasonable sounding domain I can and promise never to sell them in hopes you guys start to "get it"

My proposal does not result in people having their domains "seized" against their will in any way.  Under my idea, there is no reasonable reason for anyone to ever bid above a generic market value or the value that the domain personally holds to them for very long term use.  Long term domain users who have committed to their domain are rewarded with a long term commitment from the DAC.  Under my system BestBuy can be reasonably assured of getting bestbuy.p2p at a fair market rate even if they are late to the ".p2p" game.  Under other proposals they will never get it because I'm going to squat it to prove a point.  Under my proposal, even current TLDs like ".com" could eventually move to this type of system and away from ICANN. 

[merockstar]

hey toast, maybe something like this could help you visualize it.

I tried to make you a spreadsheet, but quickly realized that I've forgotten most of what I learned in high school about spreadsheetery.

but if you or someone on the forums is good at this stuff, you could take a look at this and get an idea of what I was going for (clearly I screwed something up because I'm getting negative values)



http://www.filedropper.com/toastspreadsheet




http://i.imgur.com/ORbd0Cy.png

[bytemaster]

After putting even more thought into it...

1) because users invest a lot into making the name valuable (and we want them to do this), they need to own it.
2) there are two kinds of names, squatted names, and active/in-use names and the ratio is likely 100:1
3) our goal is to maximize the value the blockchain earns while preventing early
4) because names are a scarce resource (limited blockchain space) perhaps all that is needed is a way to scale annual costs with the number of names.  If price goes up as the number of names increases the cost of holding names for squatting purposes goes up as well. 

All of that said, I think the biggest problem we have is that price is a moving target.

So lets keep it very simple:
1) You bid on a name, if you get outbid you only get X% back so bid wisely.
2) Let the delegates set the minimum bid based upon which transactions they are willing to include.
     - if delegates earn a commission on sales then their incentive is to balance volume vs price to maximize profit.

Shareholders now vote on delegates which set the price.  Each delegate is only able to to include a certain number of transactions in their block so if one delegate wanted to give names away "for free" then they could  but would be limited to 1% and only if they had shareholder approval.     

[gamey]

My thoughts - 

This system is very complicated.  A lot of people will want to understand the auction rules before they start.  I believe this will hinder early adoption/bidders to some extent.  Although it will be self-explanatory once implemented in a GUI, people are just going to be a bit slack-jawed at the start.

I agree with Agent86 and everyone else about trying to prevent squatting.  I think the reasonable partial solution may be to have a decaying start price.  So it starts at 1k USD and has some decay function for unbid auctions and stops short of $0.  $20 ?  Seems like a reasonable price discovery mechanism.

I need to look at renewal fees. (?)

I think E-bay with 0 start price works just as well as setting higher initial prices.  There is definitely some psychology involved and I am pretty sure it involves the interactivity of bids that is tied into competitiveness.  People get caught up in the moment. 15 second times blocktimes are boss in that regard.  So trying to guess R.. I would set it really low.  The downside though is that we can't have "hidden" bids so the interactivity/bidding war isn't there even with the 15 second block times.

As far as D …  you're going to have to have a sophisticated bidder to start taking such a thing into account.  With that in mind, choosing D is beyond me.

A sim makes more sense when actually addressing the OP. 

[Agent86]

Frankly, it just adds a big unknown into the equation that would keep me from using p2p if I was looking at the p2p features.  People are coming to p2p so they don't have to worry about their domain being removed by some process out of their control. AFAIK thats the main reason.

It allows you to buy a lease that no government or anyone can take from you for the time that you have paid for it.  It allows you to establish long term ownership of a domain over time that becomes very hard to ever take from you.

The whole point of p2p to me is to be uncensored.  You've just removed the largest selling point for me.  Anyway.. I agree about disagreeing.  I do think with the current system there will be a lot of squatting.  Although squatting has lost a lot of value with the proliferation of top level domains.. so.. lots of things to consider.

The system I propose is not "censored".  It is governed by very clear rules that are predictable and not up to anyone's discretion.  I don't think it treats people unfairly.

Squatting kills the value proposition out the door.   It could be worse than in our current system because no one looks at trademarks etc.  I think no one takes it serious when all the major domains are being squatted.

I would want this to be a system that could be used by everyone including large companies, not just a system for early adopter crypto nerds.

I think we could look at details but I think preventing squatting is more important for adoption of the DAC than protecting a person's "right" to forever monopolize domains that they got for cheap.

[toast]

Can we pretend like the auction system is finalized and actually discuss the parameters in the OP?

[gamey]

The sharp guys wise to the exploits are not likely to participate in a simulation.  There are a ton of varying scenarios.  Businesses are built around a single domain over a log period of time.  There really is no way to simulate this and expect to learn anything.  Even people participating in a dry run would not be motivated to give accurate information on their intentions.

I think it comes down to what is likely to scare off customers vs the price gained.  A lot of very complicated pull it out your butt math which I'm nowhere smart enough to attempt.

[vikram]

1) Press for the simulation/testing phase. 2) Gameify the simulation/testing phase. 3) Exploits found go ASAP 1 again.

Maybe my intellect is just too limited, but I don't see any other way to figure this stuff out than by being experimental. It is like when you sit inside too long and you go outside and become astonished at how detailed everything is.

[CLains]

1) Press for the simulation/testing phase. 2) Gameify the simulation/testing phase. 3) Exploits found go ASAP 1 again.

Maybe my intellect is just too limited, but I don't see any other way to figure this stuff out than by being experimental. It is like when you sit inside too long and you go outside and become astonished at how detailed everything is.

[gamey]

I am not a big fan of the alternative but I think I prefer it over the ability of allowing well capitalized opponents to force you to pay any amount they're willing to lose.  It could become a game of chicken.  It will also be huge source of FUD going forward.  I wouldn't work on building a brand under such a system. 

You've removed the possibility of government censorship and replaced it with privatized censorship via capital.

What happens if your domain isn't even making money?  Or it wasn't intended to make money?  Lots of people buy domains for reasons that do not fit under a classic business model.  IMO I think your analysis assumes a few things and one being that anyone trying to outbid your domain will be working on a rational economic basis.

The 3rd party should be able to bid, but the owner should have the ability to reject any bid.  I just don't see the leasing model working.. I doubt I could come up with an improvement on Toast's model to make everyone happy.  Somewhere I've asked how it prevents squatting and I agree with your criticism in that regard.  Perhaps squatting could be mitigated by a voting system that removed the squatter's domains ?

Perhaps we need to agree to disagree.  My feeling is your interpretation of how it plays out is way off base.  I suspect if you experienced this model you'd quickly see it different.  Why are all these "well capitalized opponents" in such a rush to give you all this money and waste their own?  Everyone who has shares is invested in the system and profits from its success.  I don't think there will be all these people running around trying to harass people and renting domains they have no use for and which are of no value to them.  I think the "well capitalized" people will run out of money quickly with that strategy.
If someone offers you more for your domain than it's worth to you, you can take the profit and invest it in your business or use it for your non-profit objectives.  They can follow you around buying from you any domain you use, and you'll collect the profit and they'll end up with a giant pile of domains they paid tons of money for that are worthless.  You'll probably be able to go back and scoop up your original domain for cheap once they're bankrupt and you're newly wealthy.  More likely, wealthy people will be smart enough not to do this to themselves in the first place.

I never suggested an opponent would chase someone around buying every domain.  They'd buy the ones you've invested a lot into.  I just stated what will and can happen in certain situations.  You said it was a relic of the past, but  trademarks and copyrights are not allowed to be forcibly removed from their owner by an unrelated investment of capital.  I think that is a sane policy. 

You are misinterpreting my statement that there will be some entity that does this across the board.  I said everyone won't necessarily be acting on a rational economic basis.  Meaning it will be a case by case basis.

Frankly, it just adds a big unknown into the equation that would keep me from using p2p if I was looking at the p2p features.  People are coming to p2p so they don't have to worry about their domain being removed by some process out of their control. AFAIK thats the main reason.

Assume p2p was adopted widely.  People put a lot of effort into inbound links and SEO etc.  The aging of the domain etc.  There are quite a few domains where value is very transferable.  For someone to be able to come in and bid for all your SEO/inbound link work and take your labor from you doesn't seem like a selling point for p2p, even if the market incentives seem to line up better.  The alternative is you pay twice for your own work.  The inital price and then defending your domain.  It is almost like a tax to me.  I know the business I am working on the domains are actually very important.

I'm not saying that it'll be a problem for most people, but the current DNS system isn't a problem for most people either.  p2p is targeted at people who have a specific need for decentralized domain control.  I would expect the businesses to be the exception to things in general and not fall under a general case.

The whole point of p2p to me is to be uncensored.  You've just removed the largest selling point for me.  Anyway.. I agree about disagreeing.  I do think with the current system there will be a lot of squatting.  Although squatting has lost a lot of value with the proliferation of top level domains.. so.. lots of things to consider.

[Agent86]

I am not a big fan of the alternative but I think I prefer it over the ability of allowing well capitalized opponents to force you to pay any amount they're willing to lose.  It could become a game of chicken.  It will also be huge source of FUD going forward.  I wouldn't work on building a brand under such a system. 

You've removed the possibility of government censorship and replaced it with privatized censorship via capital.

What happens if your domain isn't even making money?  Or it wasn't intended to make money?  Lots of people buy domains for reasons that do not fit under a classic business model.  IMO I think your analysis assumes a few things and one being that anyone trying to outbid your domain will be working on a rational economic basis.

The 3rd party should be able to bid, but the owner should have the ability to reject any bid.  I just don't see the leasing model working.. I doubt I could come up with an improvement on Toast's model to make everyone happy.  Somewhere I've asked how it prevents squatting and I agree with your criticism in that regard.  Perhaps squatting could be mitigated by a voting system that removed the squatter's domains ?

Perhaps we need to agree to disagree.  My feeling is your interpretation of how it plays out is way off base.  I suspect if you experienced this model you'd quickly see it different.  Why are all these "well capitalized opponents" in such a rush to give you all this money and waste their own?  Everyone who has shares is invested in the system and profits from its success.  I don't think there will be all these people running around trying to harass people and renting domains they have no use for and which are of no value to them.  I think the "well capitalized" people will run out of money quickly with that strategy.
If someone offers you more for your domain than it's worth to you, you can take the profit and invest it in your business or use it for your non-profit objectives.  They can follow you around buying from you any domain you use, and you'll collect the profit and they'll end up with a giant pile of domains they paid tons of money for that are worthless.  You'll probably be able to go back and scoop up your original domain for cheap once they're bankrupt and you're newly wealthy.  More likely, wealthy people will be smart enough not to do this to themselves in the first place.

[gamey]

Being able to outbid an owner of a domain seems bad to me.  There is a lot of value the owner of a domain may put into the domain itself.  Then you're asking them to pay for this value again to defend against a well funded opponent.  It seems like you're going to be fighting for adoption to begin with.  Giving this ability to your opponents isn't going to help...

I think this thinking is a relic of being used to the current system.  In my proposal there is an incentive to put your roots down early and hold on to a domain you care about long term.  The longer you've held a domain (more established you are), the longer it takes to uproot you, it's more expensive and risky for them to do it, and the more you get paid if you decide to accept an offer to move.   The value of most domains in not transferrable; the real value is in the company and people running the site behind the domain.  It unlikely your domain will be worth more to someone else than it is to you; if someone bids on it they would need a legitimate long term interest that goes beyond putting up a spoof site to be worth it.  You will also have plenty of time to tell your customers that you're moving away from "furniture.com" and moving to "joesfurniture.com" because "furniture.com" got some bids from a national chain while you just have a small local shop.  Customers would understand this and it wouldn't ruin your business.  You don't get to monopolize a generic name like furniture.com in perpetuity just because you happened to win an auction before anyone else had heard of ".p2p".  It's better for everyone if domains can find themselves in the hands of the people that maximize their value in the long run. 

It's also sooo much better than the alternative.  You won't find that every domain you're interested is taken and parked with some place holding site and you have to get ahold of some DB trying to figure out how much it's worth to you and play games.  You'll be able to easily get sites you like for a fair market value.

If someone wins a site with the intent to flip it, they will be out there making sales calls to get it sold because once their lease is up they just lost that money.  People trying to make money from investing in .p2p domains could become our most aggressive sales force trying to promote .p2p so they can sell the domains quick; holding them loses money.

I am not a big fan of the alternative but I think I prefer it over the ability of allowing well capitalized opponents to force you to pay any amount they're willing to lose.  It could become a game of chicken.  It will also be huge source of FUD going forward.  I wouldn't work on building a brand under such a system. 

You've removed the possibility of government censorship and replaced it with privatized censorship via capital.

What happens if your domain isn't even making money?  Or it wasn't intended to make money?  Lots of people buy domains for reasons that do not fit under a classic business model.  IMO I think your analysis assumes a few things and one being that anyone trying to outbid your domain will be working on a rational economic basis.

The 3rd party should be able to bid, but the owner should have the ability to reject any bid.  I just don't see the leasing model working.. I doubt I could come up with an improvement on Toast's model to make everyone happy.  Somewhere I've asked how it prevents squatting and I agree with your criticism in that regard.  Perhaps squatting could be mitigated by a voting system that removed the squatter's domains ? 

[Agent86]

Being able to outbid an owner of a domain seems bad to me.  There is a lot of value the owner of a domain may put into the domain itself.  Then you're asking them to pay for this value again to defend against a well funded opponent.  It seems like you're going to be fighting for adoption to begin with.  Giving this ability to your opponents isn't going to help...

I think this thinking is a relic of being used to the current system.  In my proposal there is an incentive to put your roots down early and hold on to a domain you care about long term.  The longer you've held a domain (more established you are), the longer it takes to uproot you, it's more expensive and risky for them to do it, and the more you get paid if you decide to accept an offer to move.   The value of most domains in not transferrable; the real value is in the company and people running the site behind the domain.  It unlikely your domain will be worth more to someone else than it is to you; if someone bids on it they would need a legitimate long term interest that goes beyond putting up a spoof site to be worth it.  You will also have plenty of time to tell your customers that you're moving away from "furniture.com" and moving to "joesfurniture.com" because "furniture.com" got some bids from a national chain while you just have a small local shop.  Customers would understand this and it wouldn't ruin your business.  You don't get to monopolize a generic name like furniture.com in perpetuity just because you happened to win an auction before anyone else had heard of ".p2p".  It's better for everyone if domains can find themselves in the hands of the people that maximize their value in the long run. 

It's also sooo much better than the alternative.  You won't find that every domain you're interested is taken and parked with some place holding site and you have to get ahold of some DB trying to figure out how much it's worth to you and play games.  You'll be able to easily get sites you like for a fair market value.

If someone wins a site with the intent to flip it, they will be out there making sales calls to get it sold because once their lease is up they just lost that money.  People trying to make money from investing in .p2p domains could become our most aggressive sales force trying to promote .p2p so they can sell the domains quick; holding them loses money.

[mf-tzo]

I think that when biding for a domain ti should be for at least 3 years lease maybe more... There should be some simplicity for the first 5 of years and real benefits to early adopters..

I also think that squatting existing names is not a bad thing. The known names are the ones that will create most value in the auctions and it is fair for everyone to bet on those names with the possibility to sell it to their rightful owner in the future realising profits. If I bid and get for example Mercedez and make a site with Mercedez cars crashing and Mercedez finds out (probably I will let them know) they will want to buy that domain. This  will make profits for me (not very ethical), profits for the DAC (not very ethical), big companies will be forced to learn about .p2p and use it (not very ethical but we will achieve our purpose)

Any thoughts on my unethical tactics?

[gamey]

I don't understand how your incentives stop squatting; you're still letting people buy a domain and then renew it indefinitely for a transaction fee.

The way I would do it: the domains are owned by the DAC, we rent/lease them for use.

People can bid on a 1 year lease.  You don't have to do this complicated stuff where half the difference goes to the DAC etc.  You just have an auction for a 1 year lease and whoever wins pays the DAC up front for 1 year.  They can extend the lease at the same rate whenever they like to keep the lease expiration date up to one year into the future.

If someone else has their eye on the domain, they can put in a bid with an upfront payment for a 1 year lease at a higher rate.  At that point, the current owner has options.  They can sublease the domain to the higher bidder and collect the difference until the date that their lease is up.  Or they can continue to extend their lease at a rate that matches the higher offer.  If they ignore the bid then they can no longer extend their lease at their old rate and the new bidder takes over when their lease expires.

I would also say people who have held domains for a long time have the option to extend their lease further into the future (up to the length of time they've held the domain)  So if you've rented it for 3 years you can prepay your lease for 3 years into the future so you know you won't be priced out of your domain without lots of warning.  Even if they prepay for 3 years they have to complete at least 1 transaction per year like everyone else to verify they haven't lost their key.

Being able to outbid an owner of a domain seems bad to me.  There is a lot of value the owner of a domain may put into the domain itself.  Then you're asking them to pay for this value again to defend against a well funded opponent.  It seems like you're going to be fighting for adoption to begin with.  Giving this ability to your opponents isn't going to help...

[Agent86]

Looking at my prior proposal with respect to your goals:

High level goals:
1) Make it more profitable to hold shares than names

Done

2) Make it profitable to participate in price discovery

No need to pay people to "participate in price discovery"  with my proposal price discovery happens on its own from people getting domains that they have a real interest in using.

3) Make it profitable to bid high early

If no one else wants the domain or has expressed interest, I should be able to get it very cheap regardless of how much I personally like it,  I shouldn't have to bid unnecessarily high.

the shares will be deflationary and thus someone who attempts to buy a bunch of names early will face higher and higher holding costs until they put the name up for auction again and reset the lease rate.
...Lease rate remains fixed until name is re-auctioned

Are you saying that once someone leases a domain they can continue to lease it at that rate for as long as they like?

Names remain available from the squatters who always have the names for sale. 

What makes you sure that the squatters will "always have the names for sale"?  I think my proposal ensures this much better and basically makes squatting a complete waste of time in the first place.

Lastly, allow someone to exit their lease early and recover the balance of their term.  Otherwise squatters have no incentive to give up a name prior to the end of their lease.   

If people can just "exit their lease early and recover balance" then they can bid on whatever auction they want and if they "accidentally win" they can just "exit early" with no loss.  Am I missing something?
I feel like you are redefining lease if there is no commitment.

My proposal already offers a big incentive to give up the name prior to the end of lease:  Giving it up quickly is the only way to profit from the sublease.  If they wait till their lease is up, they get no profit.

As far as bidding rules go you want to achieve the following:

1) recognize that bidders are taking a major risk that someone started an auction at a low price and didn't have any intent of bidding higher.  This particular attack causes a lot of people to lose money and costs the attacker nothing (they make money when they get outbid)

2) because there is no way to tell the difference between this "fake initial bid" and a legitimate bid the best we can do to prevent this kind of attack is to make all bids costly.   If you get outbid then you only get 95% of your bid back.  This will encourage individuals to bid the winning bid first, rather than risk being outbid.

I think my proposal does away with the need for this complexity

[toast]

1) recognize that bidders are taking a major risk that someone started an auction at a low price and didn't have any intent of bidding higher.  This particular attack causes a lot of people to lose money and costs the attacker nothing (they make money when they get outbid)

The goal is that people *only* bid the max price they are willing from the start, the only people it causes to lose money are people who don't want the name but bid on it anyway hoping to profit. That is fine, they are who pay the people who get genuinely outbid.

[toast]

Based upon the value proposition of squatting, it becomes clear that PricePaid * Holding Period becomes the biggest deterrent to squatters.   We must also factor in that if the DAC is successful the shares will be deflationary and thus someone who attempts to buy a bunch of names early will face higher and higher holding costs until they put the name up for auction again and reset the lease rate.

1) Bid on lease rate
2) Lease rate remains fixed until name is re-auctioned
3) Lease payments go to shareholders
4) You can transfer your lease, but not change the rate.

We don't have BitUSD on this chain so this is simply not feasible. These shares could grow in value 10x.

This also goes against the philosophy of actually being able to own your name.. I completely disagree with the idea of domains being "the commons" and I am surprised BM made this reversal as well.

Not sold on it, at all. The existing mechanism accomplishes all three high level goals as well.

[bytemaster]

High level goals:

1) Make it more profitable to hold shares than names
2) Make it profitable to participate in price discovery
3) Make it profitable to bid high early

Philosophy:
1) Price fixing results in scarcity or over abundance
2) Price fixing below market value results in all names being bought up by squatters who keep the profit potential between the market price and the fixed price.
3) There is nothing wrong with squatting in the absence of price fixing, from the perspective of a DAC the squatters are taking on the risk and the DAC keeps guaranteed profits. 
4) DACs should attempt to maximize profits     

Look at value proposition of squatting on a name:
1)  Resale Price * Probability of Resale - Price Paid - Holding Period * maintenance fees ==> some rate of return.
         - factor in the 'birthday paradox' of holding 1000's of names with a 1:1000 chance of getting 1000x return.
2) Make the rate of return on shares greater than the rate of return on squatting
         - require maintenance fees that make holding a large number of names expensive
         - make the maintenance fees proportional

Solution:
Based upon the value proposition of squatting, it becomes clear that PricePaid * Holding Period becomes the biggest deterrent to squatters.   We must also factor in that if the DAC is successful the shares will be deflationary and thus someone who attempts to buy a bunch of names early will face higher and higher holding costs until they put the name up for auction again and reset the lease rate.

1) Bid on lease rate
2) Lease rate remains fixed until name is re-auctioned
3) Lease payments go to shareholders
4) You can transfer your lease, but not change the rate.

Conclusion:
1) squatting on names early on is a good way to lock in a high lease rate if the system ever becomes popular
2) DAC share holders retain a revenue stream rather than a one-time lump payment
3) squatting on many names becomes costly

Once this basic system is in place then squatters are no longer an issue.  They will be competing with each other for the right to lease names at the highest price possible and thus the network constantly gets the best stream.  Names remain available from the squatters who always have the names for sale. 

We should not aim to make all sails from the chain, but instead aim for proper price discovery that maximizes value for shareholders.   

Lastly, allow someone to exit their lease early and recover the balance of their term.  Otherwise squatters have no incentive to give up a name prior to the end of their lease.   

As far as bidding rules go you want to achieve the following:

1) recognize that bidders are taking a major risk that someone started an auction at a low price and didn't have any intent of bidding higher.  This particular attack causes a lot of people to lose money and costs the attacker nothing (they make money when they get outbid)

2) because there is no way to tell the difference between this "fake initial bid" and a legitimate bid the best we can do to prevent this kind of attack is to make all bids costly.   If you get outbid then you only get 95% of your bid back.  This will encourage individuals to bid the winning bid first, rather than risk being outbid.

I recognize this is a significant change from earlier designs, but I think it addresses some major issues.

[Agent86]

There's another discussion to be had about whether to limit the number of concurrent auctions near the start when it is not clear that the .p2p namespace is worth anything at all, and whether to keep it limited to some larger number once it is just to make it so that humans can go through and evaluate all the domains for sale at a given time.

Yes, it's probably a good idea to regulate the flow of auctions to some extent, especially early on. This would help prevent the problem whereby quality names fall through the cracks, are scooped up for dirt cheap, and then squatted on. After all, people are boundedly rational, and they have limited attention and search capabilities.

Or you could just do it the way I've suggested and all these problems are eliminated.  AmatoB what are your thoughts on my proposal?  Are there downsides that you have in mind?

[amatoB]

There's another discussion to be had about whether to limit the number of concurrent auctions near the start when it is not clear that the .p2p namespace is worth anything at all, and whether to keep it limited to some larger number once it is just to make it so that humans can go through and evaluate all the domains for sale at a given time.

Yes, it's probably a good idea to regulate the flow of auctions to some extent, especially early on. This would help prevent the problem whereby quality names fall through the cracks, are scooped up for dirt cheap, and then squatted on. After all, people are boundedly rational, and they have limited attention and search capabilities.

[toast]

You're missing the fact that you can sell the names off-chain for any price. Since that is possible you mught as well let them do it on-chain for the chance of getting at least something for the network.

Sent from my SCH-I535 using Tapatalk

Is this true? There's really no way to prevent or deter off-chain sales?Then why would a holder ever sell on-chain and give up a fraction of profit to shareholders? Why not run a private off-chain sale or auction and capture all of the rents?

He doesn't give up a fraction, he always gets *at least* what he put it up for. But this way he also has a chance that others will bid more than he intended and he will get *even more*, and also the network could get some too.

He could run an off-chain auction if it will be as visible as it is on the built in market.

The only way to deter off-chain sales is to make domains non-transferrable. So you can't do anything if your keys are compromised or need to transfer ownership. Well actually you could still transfer ownership but not in a way where the new owner would know it is safe.

[amatoB]

You're missing the fact that you can sell the names off-chain for any price. Since that is possible you mught as well let them do it on-chain for the chance of getting at least something for the network.

Sent from my SCH-I535 using Tapatalk

Is this true? There's really no way to prevent or deter off-chain sales?Then why would a holder ever sell on-chain and give up a fraction of profit to shareholders? Why not run a private off-chain sale or auction and capture all of the rents?

[toast]

You're missing the fact that you can sell the names off-chain for any price. Since that is possible you mught as well let them do it on-chain for the chance of getting at least something for the network.

Renewal price being based on sale price (some percentage) is something worth considering I suppose.

Sent from my SCH-I535 using Tapatalk

[amatoB]

Apparently, the proceeds from a resale are largely captured by the network, not by the holder who puts a name back on auction (is this accurate?)

A seller can start an auction at whatever price, and will get at least that much (+ kickback ratio * difference). The rest will go to network (dividend ratio on all subsequent bids). Otherwise all sales would be off-market, which would stop us from capturing potential income from bidders the original seller didn't know about.

Why give the holder all the rents from the starting price of the re-sale auction? Doesn't that make the squatting problem much worse by giving a squatter too much profit from resale, even if they are not using the name for any productive purpose?

Why not make the winning bid a yearly price of renewing the lease? If a nameholder fails to pay the yearly price, the name automatically goes back to a regular auction at a low price, or goes back to the pool of available names.

Granted, this might not prevent the blackmail/ransom type of squatting problem where a squatter tries to extort private payments (which might need to be addressed by legal remedies).

But, at least giving most of the re-sale starting price to the network--not to the re-seller--would address the more innocuous type of "squatting" under which you passively hold a name fallow in the hopes of getting an offer. And the resale auction would still give most fees to the network/shareholders. Or am I missing something?

[Agent86]

You can still profit from a domain you added value to by subleasing it.

But you can only do this until your lease expires and you are forced to compete on the market again afterwards, right?

Sure, but if you just got the site, you should be content with the quick profit... It's not much different than losing the auction, someone else values it more so those are the breaks.  If you've had it a long time, you can sublease it for a long time and make good money.  Also, someone needs to be real serious before they put in a bid because they need to come up with the money for all those years and if you call their bluff they better have a plan for what they will do with that site and how they'll get ROI if you move on.  If they didn't have a plan they'll be panicking to sell it because it's costing money they can't just sit on it forever.

I also think your current plan has big squatter problems.

Can you explain? You think it will be worse than .com / .bit, or just "not much better"

I can't say I've thought it through extensively but as first glance I would say "not much better" plus more confusing.  I'm not sure many people are going to be playing the game of trying to profit by bidding on sites and then hoping someone outbids them and hoping they don't get stuck with a site they had no use for; it seems like a lot of work to me.  As you already pointed out, early on people will be able to scoop up domains cheap because no one is sure if it will catch on.  Then they can keep the domains as long as they want and extort people who have a use for them, I think it would make the system less likely to catch on.

[toast]

You can still profit from a domain you added value to by subleasing it.

But you can only do this until your lease expires and you are forced to compete on the market again afterwards, right?

I also think your current plan has big squatter problems.

Can you explain? You think it will be worse than .com / .bit, or just "not much better"

[Agent86]

I've thought a solution like yours before and I don't really like it. One issue is that it doesn't let people capture the value they added to a name. The other value proposition of this DAC is that you can finally *own* a domain, not just have it leased to you by ICANN.


The goal is not that "your" domain is available (not being 'squatted'), just that it is being sold by someone who wants to sell it to you for a fair price.

These incentives just make it more profitable for you not to squat and simply hold nameshares unless you know that you can flip a domain for *higher than what the market currently prices it at*. There is still room for "squatters", but these are more like real estate companies. They want to sell their space and will eat their losses as soon as it becomes obvious they made a bad bet.

There's another discussion to be had about whether to limit the number of concurrent auctions near the start when it is not clear that the .p2p namespace is worth anything at all, and whether to keep it limited to some larger number once it is just to make it so that humans can go through and evaluate all the domains for sale at a given time.

I disagree, I think domain names are basically "the commons" and should be treated as such.  This puts the domain name into the hands of the people who can maximize it's value... I think that's more efficient for everyone.   You can still profit from a domain you added value to by subleasing it.  If you have your own domain that isn't something real generic, no one has a reason to bother you or bid on it and you'll have it cheaper than something from godaddy.

I also think your current plan has big squatter problems.

[toast]

Apparently, the proceeds from a resale are largely captured by the network, not by the holder who puts a name back on auction (is this accurate?)

A seller can start an auction at whatever price, and will get at least that much (+ kickback ratio * difference). The rest will go to network (dividend ratio on all subsequent bids). Otherwise all sales would be off-market, which would stop us from capturing potential income from bidders the original seller didn't know about.

So, the proposed system is sort of like a lease. For example, a name might be worth 500, but if a potential cybersquatter can only personally get 100 from putting it on auction later, then they have much less to gain from squatting in the first place. It's a rather clever system, the effectiveness of which will depend on the parameter choices. A lot of thought and tweaking will probably be needed to choose the best implementation of the basic idea to get the economics right.

It is even more clever if dividends are explicit - you'd suffer a very concrete opportunity cost any time you choose to hold domains over their equivalent value of shares. Still on the fence about whether the extra complexity from explicit dividends are worth it. (Also tax implications, which is stupid and hilarious because it's literally just a bunch of careful UI changes...)

[amatoB]

Potential cyber-squatting seems like an important issue to consider. If I understand correctly, the proposed system solves it to some degree.

Apparently, the proceeds from a resale are largely captured by the network, not by the holder who puts a name back on auction (is this accurate?) So, the proposed system is sort of like a lease. For example, a name might be worth 500, but if a potential cybersquatter can only personally get 100 from putting it on auction later, then they have much less to gain from squatting in the first place. It's a rather clever system, the effectiveness of which will depend on the parameter choices. A lot of thought and tweaking will probably be needed to choose the best implementation of the basic idea to get the economics right.

Having said that, I think the system as proposed doesn't completely eliminate bad behavior. For example, someone might lock up a name to harm a competitor, celebrity, or wealthy person, and then demand a public or private ransom in order to release the name back onto the market. Unless there are private rights of action like the ability to sue for cybersquatting, how would such behavior be checked under the proposed system? Combining the new auction system with term limits on right of usage might be a good idea. The winning bid could be a per-year lease rate, for example.

The kick-backs are a clever and essential feature, though. They directly reward value-finders and shareholders, and they help facilitate price discovery in a world of costly search and costly information.

[toast]

I've thought a solution like yours before and I don't really like it. One issue is that it doesn't let people capture the value they added to a name. The other value proposition of this DAC is that you can finally *own* a domain, not just have it leased to you by ICANN.


The goal is not that "your" domain is available (not being 'squatted'), just that it is being sold by someone who wants to sell it to you for a fair price.

These incentives just make it more profitable for you not to squat and simply hold nameshares unless you know that you can flip a domain for *higher than what the market currently prices it at*. There is still room for "squatters", but these are more like real estate companies. They want to sell their space and will eat their losses as soon as it becomes obvious they made a bad bet.

There's another discussion to be had about whether to limit the number of concurrent auctions near the start when it is not clear that the .p2p namespace is worth anything at all, and whether to keep it limited to some larger number once it is just to make it so that humans can go through and evaluate all the domains for sale at a given time.

[Agent86]

I don't understand how your incentives stop squatting; you're still letting people buy a domain and then renew it indefinitely for a transaction fee.

The way I would do it: the domains are owned by the DAC, we rent/lease them for use.

People can bid on a 1 year lease.  You don't have to do this complicated stuff where half the difference goes to the DAC etc.  You just have an auction for a 1 year lease and whoever wins pays the DAC up front for 1 year.  They can extend the lease at the same rate whenever they like to keep the lease expiration date up to one year into the future.

If someone else has their eye on the domain, they can put in a bid with an upfront payment for a 1 year lease at a higher rate.  At that point, the current owner has options.  They can sublease the domain to the higher bidder and collect the difference until the date that their lease is up.  Or they can continue to extend their lease at a rate that matches the higher offer.  If they ignore the bid then they can no longer extend their lease at their old rate and the new bidder takes over when their lease expires.

I would also say people who have held domains for a long time have the option to extend their lease further into the future (up to the length of time they've held the domain)  So if you've rented it for 3 years you can prepay your lease for 3 years into the future so you know you won't be priced out of your domain without lots of warning.  Even if they prepay for 3 years they have to complete at least 1 transaction per year like everyone else to verify they haven't lost their key.

[onceuponatime]

What are the units and potential variability of the value of the bid?

"I bid 100" of what?

I get it now.   

[amatoB]

*  R needs to be high enough to realistically motivate people to bid as high as they would be willing to pay right form the start.

Why is this necessary? In practice (e.g., like on EBay), short auction times can be a powerful motivator to get people to bid at or near their valuations. Couldn't setting R high (to motivate people to bid their true value right from the start) exclude speculators and hinder price discovery? Some auctions might not start at all, with the names sitting idle...

The purpose of R is to get information out of people who are willing to bet the domain should be worth more but don't want to actually hold it.

Your second point doesn't make sense... if R is high and people are motivated to bid the true value right from the start isn't that the opposite hindering price discovery or having auctions not start at all?

In some cases, people may be uncertain of the value; they might need to combine their own information/beliefs with information in the marketplace, i.e., what they observe in the market from bidding action and such. Maybe that's why you sometimes see EBay auctions with low starting prices actually end up higher than identical items with much higher starting bid minimums. Bidder irrationality and psychology are also factors to consider.

I'm just thinking that there might be a tradeoff in R. People are naturally drawn to bidding action (for rational and irrational reasons). Too high of an R value might dissuade some speculative bidders from dipping a toe in the water.

[toast]

I agree with your point about R needing to be reasonably low though... 1 is probably way too big.

[toast]

*  R needs to be high enough to realistically motivate people to bid as high as they would be willing to pay right form the start.

Why is this necessary? In practice (e.g., like on EBay), short auction times can be a powerful motivator to get people to bid at or near their valuations. Couldn't setting R high (to motivate people to bid their true value right from the start) exclude speculators and hinder price discovery? Some auctions might not start at all, with the names sitting idle...

The purpose of R is to get information out of people who are willing to bet the domain should be worth more but don't want to actually hold it.

Your second point doesn't make sense... if R is high and people are motivated to bid the true value right from the start isn't that the opposite hindering price discovery or having auctions not start at all?

[amatoB]

*  R needs to be high enough to realistically motivate people to bid as high as they would be willing to pay right form the start.

Why is this necessary? In practice (e.g., like on EBay), short auction times can be a powerful motivator to get people to bid at or near their valuations. Couldn't setting R high (to motivate people to bid their true value right from the start) exclude speculators and hinder price discovery? Some auctions might not start at all, with the names sitting idle...

[amatoB]

Help me reason through these incentives.

There are two critical parameters at play, let's call them R (above 0) and D (between 0 and 1).

The rules for an auction are:
1) The initial required bid is 0.
2) Your required_bid is equal to (previous_bid + (R*(previous_bid - previous_required_bid))
3) When you place a bid, (D*(your_bid - previous_bid)) goes to dividends and (previous+bid + (1 - D)*(your_bid - previous_bid)) goes to dividends.


An example: suppose R = 1 and D = 0.5

Brand new auction.
I bid 100. My required bid was 0, so the next person must bid 200.   (100 goes to dividends as there is no previous bidder)
Next person bids 210. His required bid was 200, so next required bid is 220.  (Previous bidder gets 150, 50 goes to dividends)
Next person bids 300. His required bid was 220, so next required bid is 380.  (Previous bidder gets  255, 45 goes to dividends).


Thoughts:
*  R needs to be high enough to realistically motivate people to bid as high as they would be willing to pay right form the start. I'm thinking this might happen even with a value less than 1.
*  D needs to be low enough to motivate people to call people out on low bids, but high enough to make outbidding yourself not worth it (extra price buffer more worthwhile than money you save from your own kickback).

I'm not sure I fully understand the incentives, but my quick impression is that R should not be too large.

At some point, a high R will dissuade a new bidder from joining in (because the increment to the next required bid amount overshoots their valuation). Anticipating this, a speculator might believe that he won't recoup his expenses and may be wary of bidding in the first place. Then the whole market could unravel...

[onceuponatime]

What are the units and potential variability of the value of the bid?

"I bid 100" of what? 

[toast]

Help me reason through these incentives.

There are two critical parameters at play, let's call them R (above 0) and D (between 0 and 1).

The rules for an auction are:
1) The initial required bid is 0.
2) Your required_bid is equal to (previous_bid + (R*(previous_bid - previous_required_bid))
3) When you place a bid, (D*(your_bid - previous_bid)) goes to dividends and (previous+bid + (1 - D)*(your_bid - previous_bid)) goes to previous bidder.


An example: suppose R = 1 and D = 0.5

Brand new auction.
I bid 100. My required bid was 0, so the next person must bid 200.   (100 goes to dividends as there is no previous bidder)
Next person bids 210. His required bid was 200, so next required bid is 220.  (Previous bidder gets 150, 50 goes to dividends)
Next person bids 300. His required bid was 220, so next required bid is 380.  (Previous bidder gets  255, 45 goes to dividends).


Thoughts:
*  R needs to be high enough to realistically motivate people to bid as high as they would be willing to pay right form the start. I'm thinking this might happen even with a value less than 1.
*  D needs to be low enough to motivate people to call people out on low bids, but high enough to make outbidding yourself not worth it (extra price buffer more worthwhile than money you save from your own kickback).